RIL shares down 1% ahead of Q1; here’s what to expect

Shares of Reliance Industries (RIL) were under stress on Friday as investors turned jittery ahead of its June quarter earnings report slated to be released post-market hours today. The oil-to-telecom conglomerate is expected to post a sequential drop in its profit and EBITDA for the April-June period, primarily due to weak performance of oil-to-chemicals (O2C) business. However, revenue is expected to grow by around 10-12% aided by strong performance of retail and telecom divisions.    

Snapping previous session gain, RIL shares declined as much as 1.4% to ₹3,123.85 on the BSE today, while the market slipped to ₹21.15 lakh crore.  Early today, the country’s most valued stock opened higher at ₹3,175 after ending up by 0.6% to ₹3,170.35 in the previous session.

RIL shares touched its 52-week high of ₹3,217.90 on July 8, 2024, and a 52-week low of ₹2,221.05 on October 26, 2023. The Sensex heavyweight has risen nearly 21% in the calendar year 2024, while it gained 10% in the last one year. The counter added 14% in six months and 7% in the past one month.

According to JM Financial, billionaire Mukesh Ambani-led RIL is expected to report consolidated net profit of ₹15,387 crore in the first quarter ended June 30, 2024, down 3.9% year-on-year (YoY) and 18.8% sequentially. The revenue is projected to grow 11.5% YoY to ₹2.31 lakh crore, while it is expected to drop 2.1% quarter-on-quarter.

For Q1 FY25, EBITDA is expected to be down 7.4% QoQ and up 3.3% to ₹39,368.5 crore due to sharp 20% QoQ decline in O2C EBITDA driven by fall in refining and petchem margins. The digital EBITDA is expected to be higher by 2.4% QoQ, retail EBITDA is expected to be up 2.2% QoQ and E&P EBITDA is expected to be down 8.5% QoQ.

The brokerage assumed that the O2C EBITDA to decline 20% QoQ to ₹13,400 crore due to decline in gross refining margin  (GRM) to 8 per barrel (vs implied GRM of 11.2/bbl in Q4 FY24) driven by sharp fall in diesel and petrol cracks with refining throughput flattish QoQ at 16.1 million metric tonnes (MMT).

RIL ended the financial year 2023-24 on a positive note, with the gross revenue crossing 1 lakh crore mark to ₹1,000,122 crore, up 2.6% YoY, supported by continued growth momentum in consumer businesses and upstream business. The profit after tax increased 7.3% YoY to ₹79,020 crore, while the EBITDA rose by 16.1% YoY to ₹1.78 lakh crore with positive contribution from all key operating segments. As of March 31, 2024, the outstanding debt of RIL stood at ₹1.16 lakh crore as compared to ₹1.19 lakh crore in Q3 FY24 and ₹1.25 lakh crore in the same fiscal last year.

Earlier this week, Jio Financial Services Ltd (JFSL), the listed subsidiary of RIL, reported a net profit of ₹312.63 crore as against ₹331.92 crore in Q1 FY24. Sequentially, the profit increased by 0.6% from ₹310.6 crore in the March quarter of FY24. The country’s third largest listed NBFC, after Bajaj Finance and its holding company Bajaj Finserv, saw its revenue rising marginally by 0.97% to ₹418 crore in Q1 FY25 as against ₹414 crore in the same period last year. The interest income dropped to ₹162 crore, compared to ₹202 crore in the June quarter FY24 and ₹281 crore in Q4 FY24.

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